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They say “cash is king” when it comes to real estate. For those try to sell homes and flip houses, it’s cash buyers who rule. They are vitally important in the current market and can make moving property far easier. So how do active real estate investors, agents and other property owners find more cash buyers for their deals?

The Vital Importance Of Cash Buyers Now

It’s true that real estate transactions just go more smoothly when homebuyers are paying with all cash. Closing times are shorter, there are fewer sleepless nights wondering what will go wrong with the loan application at the bank and they tend to buy as-is. However, having cash buyers on tap is even more crucial than that in today’s housing market.

House flippers, real estate teams and investment firms can far better systemize their businesses and scale if they have a large database of repeat cash buyers. A large number of properties coming into the tight market are also foreclosures and other physically distressed properties or those with permit issues that can prevent buyers from using conventional mortgage loans to acquire them. They need to be bought, improved and "recycled" to reduce neighborhood blight, shore up local government finances, create jobs and even out the property tax burden.

However, down payment on home purchases appear to be shrinking, as is the percentage of cash buyers in the market. According to the National Association of Realtors Economist’s Outlook, the share of cash buyers dropped to just 21% in 2017. That compares with a national average of 31% between 2011 and 2013 and as high as 57% in Florida in 2012.

The big question is how to find those who still have the cash to buy and line them up so you can go shopping for deals with confidence — or how to move the home you have to sell now.

1. Online Marketing

There are many online marketing tools for driving inbound cash buyer leads. It can take some learning, experimenting and investment but may be far cheaper than newspaper ads or using a real estate agent. Tried-and-true approaches include building a real estate website, writing a blog, leveraging social media and placing Google ads. These are all great tools if you will be buying and selling houses regularly but can take time to set up and pay off.

2. Your Competitors

Don’t hate the competition. Find ways to work together. If you’ve been bidding on other properties at auctions or missed out to a cash buyer on a for sale by owner or MLS deal, you can reach out and build a win-win relationship. Have them become clients for your homes for sale.

3. Referrals

There are a lot of professionals who are in regular contact with individuals who have the cash to buy. Let them know you are looking to help their clients. You may be able to offer some form of commission or a finder's fee where it is legal. Great referral sources can include real estate agents, title companies, IRA custodians, 1031 exchange intermediaries, mortgage bankers and attorneys.

4. Network, Network, Network

In real estate, they say that your net worth is equal to your network. There are plenty of high net worth professionals, active investors, asset managers and well-qualified homebuyers out there. You just need to meet them and make sure they know you.

There are now a number of online real estate forums for connecting with them like BiggerPockets and Connected Investors. The National Real Estate Investors Association has well over 100 local chapters and affiliates across the country, in addition to many independent real estate investment clubs and Meetup.com groups. Then there are local, regional, national and even international industry events that attract cash buyers and private lenders who are actively looking for investment opportunities.

5. Obtain Lists Of Cash Buyers

Technology and big data pools have been making it easier to obtain large and targeted lists of potential cash buyers. Ways to accomplish this include targeting lists of those with homes free and clear of mortgages, out-of-area owners who are likely investors and multiple-property owners. Once equipped with the list you can call, email, knock on doors, find them on Facebook or send them a letter or information packet.

6. Online Platforms

There are now a growing number of online platforms on a quest to buy up homes from sellers quickly, for cash. One of them, Opendoor, has managed to raise over $200 million in funding, including a $100 million loan from homebuilder Lennar. The only downside of these national platforms and tech startups is that they often don’t work in all markets, and are very specific about what they will buy.

Cash homebuyers are highly desirable in the current real estate market. There are many benefits of cash buyers, yet they are also scarcer than they used to be, and competition for their dollars is the highest it has been in years. These strategies for finding and connecting with them are vital for real estate investors and house flippers who want to move their properties fast and grow businesses with confidence.